The step-up SIP: raise it 10% a year and the corpus doubles

A step-up SIP raises your instalment automatically each year, usually in line with your salary. The projections look spectacular. The reason is less magical than it first appears — and worth understanding before you commit.

The numbers

₹10,000 a month, 20 years, at an assumed 12%:

Step-up	You invest	Projected value	Extra vs flat
None	₹24,00,000	₹99,91,479	—
5% a year	₹39,67,914	₹1,37,37,623	₹37,46,144
10% a year	₹68,73,000	₹1,98,88,715	₹98,97,236
15% a year	₹1,22,93,230	₹3,02,55,942	₹2,02,64,462

A 10% step-up almost exactly doubles the projected corpus, from ₹99.9 lakh to ₹1.99 crore.

Now the part the marketing skips

You also invest ₹44,73,000 more. The flat SIP puts in ₹24 lakh; the 10% step-up puts in ₹68.73 lakh.

That is not a criticism — it is just the arithmetic. Roughly ₹44.7 lakh of extra contributions produced roughly ₹99 lakh of extra corpus, which is a good outcome. But a step-up SIP is not a clever trick that manufactures returns. It is mostly you investing more money.

The genuine advantage is behavioural and structural:

• The increase is automatic, so it happens whether or not you remember.
• It rises with your income rather than staying frozen at what you could afford in your twenties.
• Each increase still gets the full remaining term to compound — a rise in year three has seventeen years to work.

What the instalment actually becomes

Compounding applies to the instalment too, and 10% a year adds up faster than people expect:

	Monthly instalment
Year 1	₹10,000
Year 10	₹23,579
Year 20	₹61,159

By the final year you are investing more than six times the original amount. Before choosing 15%, look at what that column would say — the last few years of an aggressive step-up can demand more than the plan survives.

Choosing a rate

Match it to your expected salary growth, not to the projection. A step-up you abandon in year six is worse than a smaller one you keep for twenty. The projections above assume every single instalment is paid.

5% is close to inflation — it roughly keeps your contribution constant in real terms, which is the minimum for a plan not to quietly shrink.

10% is realistic for most salaried careers in the earlier years, and is where the ratio of extra corpus to extra effort still looks attractive.

15% is aggressive. It works if your income genuinely compounds that way. It fails badly if it does not, because the largest instalments fall in the years you may have the least flexibility.

You can model any of these — and see the instalment schedule year by year — in the SIP calculator using the step-up slider.

One caveat on all of it

Every figure here assumes 12% every year for twenty years. Real markets do not work that way, and a projection is not a forecast. Read why the annualised number matters more than the total, and try the same calculation at 8% before you plan around the 12% figure.

General information, not financial advice.